LEGO sets that actually sell cost less and less

If seeing the new set Liebherr crawler crane LR 13000 from 679.99 euros you thought these were the kits to tow LEGO, you’re wrong (by the way, do you know how to score LEGO Insiders points by scanning manuals?).

The brick giant has in fact just published i financial results related to 2023, from which an interesting emerges trend: growing turnover but falling profits. And one of the reasons, according to the head of the company Niels B. Christiansenit could be precisely the fact that people are buying more and more i cheaper pieces.

But let’s start from the beginning. Yesterday March 12 LEGO published its results for the past year, reporting a growth of the 4% of sales and a 2% increase in revenue compared to the same period in 2022. Excluding the impact of currency exchange rates, revenue grew 3% compared to 2022.

LEGO Fan Italia Group

Numbers down from the previous year, when an increase of 12% of sales and an increase in 17% of revenue in 2021, but which must be considered in the perspective of a contracting toy market.

As for consumer sales, they are grew by 4% in 2023 compared to 2022, driven by strong growth in the United States and Central and Eastern Europe, according to LEGO, which offset a decline in China due to the difficult economic environment.

But let’s get to revenue and earnings, and this is where things get interesting. Revenue for 2023 increased to 65.9 billion of Danish crowns (8.8 billion euros), while operating profit fell by 5% in 2022 to 17.1 billion of Danish crowns (2.29 billion euros). However, the company claims that real profit only dropped by 2%, if we exclude the “currency effects” and that in the second half of 2023 profits increased by 7% compared to the previous year.

Net profit also fell: 13.1 billion of Danish crowns (1.76 billion euros) in 2023 compared to 13.8 billion of Danish crowns (1.85 billion euros) in the previous year.

This decline was attributed to a increase in expenses for strategic initiatives to investments in expanding its global supply chain network, building new factories, opening new LEGO stores and growing its digital team.

Spending on environmental initiatives has also increased (+60% in 2023 compared to 2022) and aims to double this year’s annual spending by 2025.

However, things are not that simple, as there is another aspect to consider. Christiansen in fact, he observed that although growth has increased, the drop in profits is also caused by a drop in the average price of sets purchased in many markets.

This, explains the manager, suggests that consumers are also buying more LEGO sets, but those that cost less. Second Christiansen it is a normalization of the market after the price increases during the pandemic, and that with 780 products adequately represent all price levels.

Nonetheless, LEGO continues to churn out very expensive sets, like the aforementioned one Crawler crane (the most expensive set of 2023), although perhaps the mention of the pandemic could give us some indication of the future. Right around that time the company launched its most expensive kit, the €849.99 AT-AT, and we wouldn’t be surprised if it decided to focus more on cheaper kits to improve growth.

Another aspect to consider is children. Christiansen states that they sold more LEGO to children in 2023, which may suggest more investment in this sector.